More than halfway through the two-year period Congress gave the U.S. Department of Agriculture to develop a disclosure standard and labeling procedures for bioengineered foods, the affected industries are still left with more questions than answers.
As food, beverage, and agribusinesses eagerly await the proposed rule — due in July 2018 — it's worth reviewing the efforts of the USDA's Agricultural Marketing Services (AMS) toward determining when and how genetically engineered foods must be disclosed. It is also important to consider the numerous unanswered questions the agency has yet to address and the potential business impacts.
Background
In July 2016, President Obama signed into law an amendment to the Agricultural Marketing Act of 1946 that required the disclosure of bioengineered foods and food containing bioengineered ingredients. The issue had gained traction among consumers (who wanted disclosure of bioengineered ingredients) and with the industry (which was concerned about efforts of individual states requiring strict labeling standards).
Conditions were thus ripe for Congress and the Obama Administration to pursue a measure that sought to satisfy consumer interest in transparency and ease industry concerns about having to comply with conflicting state labeling laws.
The law itself does not detail when disclosure is necessary or precisely how companies may comply. Instead, it gives the USDA relatively broad guidelines to follow and significant discretion to define the law's key terms and ultimately determine when and how disclosure is required.
Among the modes of disclosure that will be available to companies are (1) text, (2) a symbol (to be designed by the USDA), or (3) a scanable electronic or digital link allowing consumers the ability to electronically access a disclosure while shopping. The law gives food manufacturers the ability to choose among these disclosure options once the rules are finalized.
The law could be construed to conclude that the food item or package must bear the disclosure, which presumably means the text, symbol or digital link must be on the food itself (as in produce) or on its packaging. It is unclear, however, if the USDA will take a broader construction of the statute to also allow disclosure via other media, such as disclosure on a display case or nearby signage.
Alternative disclosure options will be available for small or very small food packages. Small food manufacturers will be given additional time to comply with the regulations and will likewise have alternative disclosure options. In addition, very small food manufacturers and food served in a restaurant or "similar retail food establishment" are excluded from compliance with the standard. Finally, special provisions apply to meat, poultry, and egg products.
Study results: Can consumers access digital links?
The USDA's first order of business was to study the technical challenges associated with consumer use of electronic or digital disclosures. Essentially, Congress required the agency to determine whether customers would be able to use electronic devices to scan barcodes or QR codes on labels.
Some of the study's findings include:
Most Americans own a smartphone (77%)
Most Americans live in areas with sufficient broadband access (93.6%) to scan a link, but 20.5 million Americans do not have access to adequate broadband
97% of national and regional chain stores provide WiFi in store
Consumers may recognize digital links, but only 62% believe they would be able to access an electronic or digital food disclosure
Access to the internet may pose challenges for consumers in rural areas, elderly consumers, and consumers using smaller retail outlets
The USDA is required to use the study results to determine if customers, while shopping, "would not have sufficient access to the bioengineering disclosure through electronic or digital disclosure methods." If the USDA determines customers would not have sufficient access, it must "after consultation with food retailers and manufacturers . . . provide additional and comparable options to access the bioengineering disclosure."
Next up: Answering the big questions
In August 2017, the USDA closed the public comment period for some of the weightier unanswered questions associated with developing the disclosure and labeling standards.
Probably the most significant outstanding questions are the following:
- How will the USDA define the term "bioengineered," especially in light of new and emerging genetic modification technologies?
- What amount of bioengineered material present in a food product will be sufficient to trigger the disclosure obligations?
- What modification should be considered "found in nature" and thus not requiring disclosure?
- What breeding techniques should be considered conventional, and thus excluded from the disclosure requirements?
- Should the USDA require disclosure for food that contains highly refined products, such as oils or sugars derived from bioengineered crops?
- How will the USDA define "small food manufacturer," "very small package," and "small package"?
- How should the USDA define "similar retail food establishments" that are excluded from disclosure requirements?
- What records must a manufacturer retain to establish compliance?
- What disclosures will be required for fruit (and other unprocessed and bulk items) that aren't sold in individual packages?
- What must the manufacturer actually disclose in an electronic or digital link?
- How will the USDA incorporate the results of the electronic and digital link disclosure survey?
- How will the disclosure requirement apply to imported products?
The answers to these questions will have wide-ranging and potentially significant impacts on companies in the food, beverage, and agribusiness sectors. Thus, while we await the proposed rule, it is important for companies to start an internal dialogue about how the law might impact their businesses and whether it may be worthwhile to file comments on any forthcoming proposed rules.
Note: This material came from my recent presentation at the American Agricultural Law Association's 2017 Annual Educational Symposium, during a session titled, "Just Label It, Correctly: Advising Clients on Emerging Food Labeling Issues."
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